Getting a Business Loan for a Startup

Business papers report news of startups raising millions of dollars every day. While this is the case for a handful of startups, the truth for most other companies is very different. Raising funds to keep a company running is usually the toughest part of the business. It boils down to the management of working capital.

Getting a business loan for a small company or startup used to be very difficult. Till about 5 years ago, the only option to get a loan was to approach a bank. Most banks wanted collateral. Such as a bank FD or property. This was the toughest part. What if you didn’t have any property in your name? It didn’t matter if you were running a high growth business with decent profits, in most cases the banks needed collateral. It was a very antiquated way of doing business. Bootstrapping was the only option.

The situation is a lot better now. Thanks to numerous NBFCs (Non-Banking financial company) that are a lot more flexible when it comes to defining eligibility for a business loan. It does not mean that you can get a loan within 3 months of starting a business. But if your business has been running for 2-3 years and has some profits to show, getting a loan should not be a problem.

Below are the eligibility criteria required for getting an unsecured (collateral free) business loan from some of the leading NBFCs/Banks.

Edelweiss Retail Finance


Eligibility:

  • Minimum 3 years of being in business
  • Profit making for last 2 years
  • Minimum turnover of Rs. 25 Lakhs

Features:

  • Loan amount: Rs. 3.5 -Rs. 45 Lakhs
  • Tenure: Upto 48 months
  • Time: 7 working days

Apply here


Capital First (Now IDFC First Bank)


Eligibility:

  • Minimum 3 years of being in business
  • Profit making for last 2 years
  • Minimum turnover of Rs. 1 crore

Features:

  • Loan amount: Rs. 3 Lak to Rs. 75 Lakhs
  • Tenure: 1 year to 5 years
  • Time: 72 hours

Apply here


Bajaj Finserv


Eligibility:

  • Minimum 3 years of being in business
  • Profit making for last 2 years
  • Minimum turnover of Rs. 1 crore

Features:

  • Loan amount: Rs. 3 Lak to Rs. 75 Lakhs
  • Tenure: 1 year to 5 years
  • Time: 72 hours

Apply here

Documentation required: (Standard across most companies)

  • Income tax returns (1-2 years)
  • Bank Statement (6 months)
  • GST Returns (Or other relevant proof of business)
  • Address & ID Proof 


Bottom line:
Interest rates for unsecured loans are higher than secured loans. But at times this is a good option considering the minimum documentation required and speed at which the loans are approved.

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